Others News
- China, Japan in coal price-hike deal
Date: 31-May-2007 Sources: (Shenzhen Daily)
COAL miners in the north of China have agreed with Japanese buyers on a 2007 price hike of about 28 percent for thermal coal, while other suppliers have unprecedentedly refused to join the deal.
Due to strong demand in China, which has pushed up domestic prices to historic highs, domestic miners are reluctant to sell much of the fuel abroad, especially as the government has scrapped tax rebates in an effort to keep more of the resource at home.
An official at the China Coal Trading Association said yesterday the suppliers had settled prices for 2007 at US$67.90 a ton, free-on-board (FOB) basis.
The price was about 28 percent higher than the US$53 agreed between China and Japan last year, and well above the settlement price of US$56 agreed between Australian coal producers and Japanese utilities this year.
The gap between the Chinese and Australian prices reflects in part the difference in freight costs, which have surged to record highs this year due to China's voracious demand for iron ore.
But industry officials said some miners in Shandong, such as Yanzhou Coal Mining Co., had rejected the agreement, asking for prices above US$80 a ton, FOB.
Wu Yuxiang, chief financial officer of Yanzhou, confirmed that Yanzhou was not included in the overall deals.
Yanzhou has said it would cut by half exports in 2007 to 3 million tons due to higher domestic prices.
So far this year, China has emerged a net coal importer for the first time in history, with exports falling 28.6 percent to 15.87 million tons in the first four months, while imports jumped 50.4 percent to 19.22 million tons during the period.
The official from the China Coal Trading Association said the mines were to ship 5 million tons of thermal coal to Japan this year, while slashing coking coal export volume to 700,000 tons from 2 million tons last year.
However, a Japanese industry official said both sides had yet to agree on quantities for 2007. They also needed to bridge differences on transport, such as who was to bear possible demurrage charges at the key Qinhuangdao port.
'It's an unusual situation,'said the official, who declined to be named.
'We've settled the price, but we need yet to negotiate the volume. It's also the first time we could not agree on one price. We don't know what will happen.'
Many industry officials have said Chinese 2007 coal exports were likely to fall further from 63 million tons in 2006, despite repeated comments by top producer and exporter Shenhua Group that it planned unchanged exports of 24 million tons.
The sharp drop in Chinese coal exports so far has forced buyers in Northeast Asia, including Japan and South Korea, to scramble for spot cargoes at other distant origins, such as Australia, Indonesia or even South Africa.
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